Thursday, June 30, 2011

Yesterday, during one of his getting-to-be-rarer press conferences, our anti-business President launched another rant/attack on corporate jets. This time he singled out the write-offs that the purchasers of corporate jets get as an incentive to buy one of these very expensive items that tend to last for decades if properly maintained. Yet, here's a guy that has no problem saddling-up Air Force One whenever he can; a plane costs $182,000/hour to operate and that is 60 times more expensive to fly than any corporate jet. In a recent "campaign trip" to Puerto Rico, Obama spent 6 hours in the air so he could spend a mere 4 hours on the ground at a cost of over a million dollars for Air Force One and all on the tax payers dime (God! I wish it only was a dime!). Last year, he ponied Air Force One around this country and the world for a total of 172 times and at a cost of around $200 million.

To me, this president has an unnatural obsession with "jets" in general; whether corporate or otherwise. I think he holds a long-harbored jealousy and hatred of the rich and those jets are representative of that wealth (a common neurosis among socialists). Or, maybe, he just sees all jet travel as hurting the environment. In fact, in my last blog entry (below) I questioned whether or not the extreme TSA pat-downs are just a means of greening America by hurting the high-carbon footprint of air travel in this country.

Yesterday wasn't Obama's only "jet" slap-down. Within a month after taking office, in a town hall meeting in Elkhart, Indiana, he launched a similar attack to yesterday's attack on corporate jets and added an attack on corporations that "fly-in" to Las Vegas for conventions; a comment that resulted in both conference cancellations and avoidance and which, I'm quite sure, helped Las Vegas become one of this nation's highest unemployment centers. Then, there were the attacks on the auto CEO's when they "jetted in" for a Congressional hearing on the auto company bailouts. Oh, and lastly, lets not forget how the Obama-anointed National Labor Relations Board is going after Boeing for building a non-union manufacturing facility in South Carolina in order to remain competitive with the euro-subsidized and euro-built Airbus that employs zero American workers.

The fact is that the removal of the "jet" tax breaks would only amount to about $300 million a year in debt reduction against a $14+ trillion deficit. Obama, alone, spent two-thirds of that amount in 2010 flying Air Force One around. However, more importantly, the removal of these "breaks" could result in a substantial loss of jobs in the jet-building industry. Many companies, without these incentives, will probably hold on to their existing jets longer or they won't add aircraft because it would be just too expensive; thus, resulting in an industry slowdown and the forcing of layoffs in an already horrid job's market. It just seems like the Democrats never learn. By targeting the rich, it is always the workers who get hit the hardest. In 1991, the Democrat-controlled Congress passed a Luxury Tax on yachts, furs, and luxury cars. The result was that more than 16,000 boat industry workers -- many highly-paid craftsmen -- lost their jobs. Hundreds of decades-old custom boat builders went out of business. Additionally, other workers in the luxury car and fur industries got laid off. Only 3 years after passage, the tax was "quietly" repealed by Bill Clinton. This President is a moron to ignore that history. But, that's what you get when you have a socialist ideologue as a President.

Tuesday, June 28, 2011

Just recently, a 95 year old woman with cancer was forced, by a TSA airport screener, to shed her soiled adult diaper for inspection in what can only be considered the ultimate embarrassment in a series of embarrassing tactics being used by Homeland Security. Everyday, travelers are having their "privates" groped by a bunch of non-medical personnel of the TSA. And, if you're not being groped, you're being scanned by a device that literally gives any viewing TSA agent an opportunity at sexual voyeurism because the images are just that revealing.

Call me the super cynic but isn't it possible that there is a more sinister reason behind this intentional embarrassment of our traveling public than simply trying to prevent terrorism?

Initially, it was my belief that all these pat downs and extra screenings were part of a planned move by this labor-supported Administration to grow the overall number of TSA agents; and, I still believe this to be true. This is especially true in light of the fact that the Obama Administration gave the green light for the TSA to unionize.

But, now, I think there's another reason. I think it is being done for environmental reasons in the hope to discourage overall air travel. I know my wife refuses to fly because of these pat-downs and those "nude" scans. When you really think about it, commercial aircraft are big greenhouse gas polluters and Obama and his little green minions are totally fixated on fighting climate change. For sure, any reduced air traffic would definitely fit the bill in saving the planet.

OK, maybe I'm wrong. But, if am, don't you think that the Department of Homeland Security would "cool it" in an effort to avoid all the bad press they've been getting?

Thursday, June 23, 2011

Today, the International Energy Agency (IEA) announced it would release 2 million barrels of oil per day from the strategic reserves in the United States and in 26 other countries for the next 30 days in the hopes that this will bring oil prices down. Well, this commitment of 60 million barrels did actually drive the price of oil down this morning by a strong $8/barrel. But, I think this was an over reaction by the markets and by some speculators trying to protect their profits.

Between the European Union and the United States, the daily consumption of oil is about 32 million barrels. So, this IEA commitment is less than two days worth of actual consumption. Like the Cash For Clunkers program (once floated here in the U.S.) the effects will be short-lived and all the original factors (like the falling dollar and the rapid economic growth in China and India and the potential disruption of Middle East oil) will still be in place after the 30 days is over; and, it is my guess that we will be right back to $100/barrel in short order. Oil pricing is being driven by future supply and demand issues which aren't about to change in the next 30 days. For those who can't seem to under this: It's simple economics, stupid!

Monday, June 20, 2011

If you listen to Obama and his soon-to-be-leaving chief economics adviser, Austan Goolsbee, the rise in last month's unemployment rate is just a bump in the road in an economy that they believe to be recovering. But, from my perspective -- and based on the facts that I will present -- that "bump" is more than just a bump. Instead, the rise in the unemployment rate was representative of a 2010 slowdown in the entire economy; and, a slowdown that was easily seen coming. All one had to do is simply look at the track of the nation's Gross Domestic Product (GDP) since the 4th quarter of 2009 to know that our economy wasn't firing on all cylinders. What's worse, the rapid recovery that had been previously seen in Obama's first year in office was actually being destroyed throughout 2010 and now, again, in 2011 as more and more stimulus funds were being dished out; creating massive amounts of national debt and a heavily devalued U.S. dollar. As a result of the dollar's fall, there has been rising inflation in both food and energy costs. As a consequence, this inflation was draining the consumer of their discretionary spending money that would otherwise be put to use in non-food/energy purchases and which would effectively fuel our economy back to a healthy recovery. This is a common problem with any Keynesian-style stimulus in an economy that imports far more than it exports and in one that gets 70% of its economic activity from consumer spending. In fact, the spending policies of Obama and the Federal Reserve have resulted in a 21% loss in our dollar's value in less than 2-1/2 years. In all of the 10 years prior to the Obama presidency, the dollar only lost 17% despite the billions being spent on two wars and the billions spent in the post-9/11 beef-up in our nation's security in federal buildings and in the formation of Homeland Security and the TSA.

To support my conclusions, I need only to present two charts:

Chart 1. Real GDP Reporting by Quarter from a negative 6.8% GDP in the 4th Quarter of 2008 to a positive 5% growth in the 4th Quarter of 2009. A Linear Regression Trend Line is overlaid to reflect the "steepness" of that recovery.

As you can clearly see from the trend line on the above chart, the economy was very much on the mend with GDP improving in each quarter of 2009. Also, you should note that there was nothing done by the Obama Administration in the first half of 2009 that would account for this easily seen economic reversal in that same year. After all, the initial stimulus funds didn't start going out the door until August of 2009. Furthermore, much of that stimulus funding wasn't actually applied to the economy until well past that date due to project delays associated with having to rebid many projects as Federal projects (requiring federal work rules and union labor) and due to the lack of either permits from local or state governments or, when applicable, project approval from the EPA. Recently, President Obama, himself, referenced those delays when he uttered these now-infamous words while some members of his Job Council just laughed: “Shovel-ready was not as ... uh ... (as) shovel-ready as we expected.”

Chart 2. Real GDP Reporting by Quarter from the 4th Quarter of 2009 at a 5% growth rate to the 1st Quarter of 2011 were the economy had slowed down to only 1.8% growth. Again, a Linear Regression Trend Line is applied; this time, to reflect the slowdown.

Obviously, the Stimulus didn't work. We actually had better performance in 2009 before any stimulus spending was ever applied. Once again, Keynesian economics has failed to produce the expected results. It failed during the Great Depression under FDR where Europe recovered much faster without Keynesian spending. It failed in the so-called "Lost Decade" (now 2 decades) in Japan where Keynesian-style stimulus was also tried a number of times to kick-start their economy. In fact, I'm not aware of any instance where the demand-side application of Keynesian economics has ever really worked. That's because Keynesians falsely assume that the economy is like some simple windup toy that can be given a few turns on the winding key (through massive government spending) and the economy will, like magic, take off again. But, this fact has never been proven to work. Yet, liberals/progressives just keep trying to make it work; over and over, again, and to no avail. They just can't help themselves. That's because they all believe that John Maynard Keynes had handed them the greatest gift that a liberal or progressive could have ever received: A macro-economic theory that gives them a license to spend, spend, and spend, again, without a care about the debt and the subsequent inflation they are creating!

And, when they are through creating massive deficits, they just want to raise taxes again to fix the mess they created. History saw this ugly fact in 1937 under FDR when taxes were raised and, as a result, the economy took another nose dive after looking like it just might be recovering. Obama has already stated that he wants to tax the millionaires and billionaires who make more than $200,000 for unmarried filers and $250,000 for those married and filing jointly to reduce the massive deficits he has created. If so, I think we'll easily see 1937 all over again.